Mark Casci: Why we must accept branch closures as a modern reality

Fifteen years ago if you asked the chief executive of pretty much every bank and building society what the biggest issue they had with their branch network was they would have in all likelihood replied that it was the length of time people were having to queue.
Banking is changingBanking is changing
Banking is changing

Nowadays, it is safe to say, queueing in banks is not so much of an issue as finding a branch in the first place.

Most of the major high street banks have this year begun to roll out more closures of parts of their branch network, with more than 450 having been shut or put on notice of such since New Year’s Day.

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Last week it was the turn of Lloyds to reveal it would be shuttering branches, with announcements from Yorkshire Bank, Yorkshire Building Society, HSBC and Leeds Building Society having all come in the last few weeks.

HSBC Bank, BuxtonHSBC Bank, Buxton
HSBC Bank, Buxton

It is a recurring trend. Since 2010 more than 2,600 banks have been closed by the so-called Big Six banks.

And each time we hear the usual cries of derision about how the elderly and non-tech savvy among our communities are being disadvantaged by having their branch taken away from them.

The problem is especially acute in rural areas, with Lloyds in particular now rolling out a mobile banking services where mini-branches in vans visit more remote areas to allow people to do transactional banking face-to-face.

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Earlier this month, MP for Wentworth & Dearne and Shadow Housing Secretary, John Healey, highlighted the case of Wath-upon-Dearne, where HSBC and Yorkshire Bank have recently announced plans to close their branches.

Lloyds bank, Eckington.Lloyds bank, Eckington.
Lloyds bank, Eckington.

Mr Healey has called upon the Government to begin a national debate as to how banks can be compelled to shy away from closures.

And he rightly argues that the sector should bear in mind how it was bailed out by the taxpayer at a colossal expense following the financial crisis when contemplating closures.

The difficulty for the banking sector, as most High Street focused business know all too well, comes from the fact that the world is moving with an ever-increasing rate of knots to doing its business digitally.

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One of the branches Leeds Building Society decided to close last week was seeing an average of six people a day.

Lloyds Banking Group, Trinity Road, Halifax.Lloyds Banking Group, Trinity Road, Halifax.
Lloyds Banking Group, Trinity Road, Halifax.

The fact cannot be denied that banks are at the end of the day, businesses.

And that if not enough people are coming through the doors to pay for the overheads of the operation it cannot be allowed to continue.

It is unrealistic for the sector to commit to its current level of branches in perpetuity and the public at large must accept this.

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It is also true that due diligence is taking place, with banks required to carry out an ‘impact assessment’ when examining a potential closure. One of major concerns that is looked at is how many so-called “ vulnerable customers” who depend on the branch will be affected.

HSBC Bank, BuxtonHSBC Bank, Buxton
HSBC Bank, Buxton

What must happen going forward is that these demographics are catered for, not left behind.

While many users are switching to online systems there are still thousands of people, digitally connected and not, who either prefer or simply have to bank in the traditional way.

The challenge is now for the banking sector to do right by these people and steer them gently towards being able to bank in a way that works for them.

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Free training for online and telephone banking should be offered to all customers, especially to those classed as vulnerable.

The process should also become simpler, whilst maintaining rigorous standards of security to protect users from cyber criminals.

None of this will be easy of course, but is fundamentally necessary if the banking industry, rocked by so-much scandal in recent history, is to retain credibility in these most parlous of times.